China's PMI at 8-month low

China's manufacturing sector expanded at its slowest pace in eight months, with the purchasing managers index (PMI) for the sector easing to 50.1% in July, down 0.1 percentage points from the previous month, according to official survey results published Wednesday.

The PMI data released by the China Federation of Logistics and Purchasing (CFLP) and the National Bureau of Statistics suggested the manufacturing sector is still expanding even though the growth has slowed.

A reading of 50% demarcates expansion from contraction.

July's PMI reading was below market expectations. Analysts had forecast that the official data could inch up from one month earlier.

A flash HSBC PMI reading published last week rose to a 5-month high of 49.5% in July due to increased pro-growth measures.

Manufacturing PMI has kept above the contraction level since November when the reading was 49%, with 50.3% for December, 50.5% for January, 51% for February, 53.1% for March, 53.3% for April, 50.4% for May and 50.2% for June.

"The decline in PMI data continued to narrow in July, reinforcing signs that the country's economy is stabilizing," said Zhang Liqun, the Development Research Center of the State Council.

China's economy expanded at 7.6% in Q-2, marking the 1st time that the country's economic growth rate has fallen below the 8% mark since Q-4 of Y 2009.

To buoy the economy, China has adopted a string of pro-growth measures, including lowering banks' reserve ratios and interest rates, subsidizing energy-saving household electrical appliances and speeding up approvals for major construction projects.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.